Ottawa says Fairfax interested in broken Churchill rail line

OTTAWA -- The federal government says a Toronto-based holding company is interested in becoming a new partner in a possible deal for a takeover of the broken rail line that runs to Churchill in northern Manitoba.

Carr says Fairfax is considering partnering with Missinippi Rail and One North to acquire the line from Omnitrax.

Severe flooding damaged the rail line last spring, cutting the only land link to Churchill, a town of 900 on the west coast of Hudson Bay.

The situation is hurting the region's tourism industry and raising the price of food and fuel.

Fairfax Financial CEO Prem Watsa (The Canadian Press/Frank Gunn)

Carr, the MP for Winnipeg South Centre, says having Fairfax involved is an important step toward a positive solution for the people of Churchill.

"This development has the potential to contribute to an arrangement supported by First Nations and communities in northern Manitoba," he said Thursday in a release.

"This would enable a sustainable business approach that results in a safe and reliable rail line."

Fairfax president Paul Rivett said the company is optimistic about the north. He said the Churchill rail corridor and the Port of Churchill are important pieces of infrastructure for northern communities and Canada's economy.

"Partnering with First Nations and communities is the right model for this investment," he said in a release.

"We have deep experience in infrastructure projects and have the necessary operational expertise to run shortline railways in partnership with our investee company AGT Foods. The key is that the plan has to be viable and profitable in the long term as a business."

Carr's comments come only days after Ottawa filed a lawsuit against Denver-based Omnitrax.

The lawsuit alleges Omnitrax has failed to repair and maintain the rail line in violation of a 2008 agreement that saw the company receive $18.8 million in federal aid for maintenance and upgrades. The lawsuit seeks repayment of the money.

Omnitrax has said it plans to file a complaint against the federal government under the North American Free Trade Agreement.

The company has said the federal government's decision to end the Canadian Wheat Board's monopoly on western grain in 2012 drastically cut grain shipments along the rail line and through the Port of Churchill.